Cryptocurrencies have become a force to reckon with in recent years. The first real storm that hit the financial market was Bitcoin, with many others joining the long train of digital currency taking over since that time. Interestingly, many more cryptocurrencies have been springing up, with investors pumping millions of dollars into digital currencies. Ironically, some people thought crypto was a Ponzi scheme, but now it is said that it would become the future currency.
One of those digital currencies currently on the train of cryptocurrency in the world today is Polkadot. This coin came into existence in 2017 after the initial coin offering boom. Robert Havemeier and Dr. Gavin Woods developed it; after that, it launched its operations in May 2020. Since then, it has become the fourth-largest cryptocurrency by market cap behind the usual suspects of Bitcoin and Ethereum.
Before we dive into the various offers traders and investors benefit from Polkadot, we will examine what exactly is this digital currency. This will help newbies in the cryptocurrency world properly understand the discourse.
What is Polkadot?
Many cryptocurrency enthusiasts believe that Polkadot is the “Blockchain of blockchains” because it is a unified network that connects multiple blockchains. It was designed to give individuals control over internet monopolies while offering different advantages to users on the network. The network is composed of different components: Para chains, Bridges, Para threads, and Relay chain that make up a decentralized application. These elements form to gather the liquidity of Ethereum. Each element has its functions that make up the grand scheme of things in the Polkadot network.
The Para chains are responsible for minting their tokens and customizing them to make them useful for individuals. On the other hand, Bridges allows Parachains and Parathreads to interact and connect effectively with the Ethereum or bitcoin network; in fact, it allows Polkadot to connect to any other blockchain. Parathreads are Polkadot models that facilitate the pay-as-you-go options without the need for repeated connectivity with the leading Polkadot network.
The system which Polkadot relies on is known as the Relay chain. It allows shared network security and interconnectivity. It is also versatile as it allows its network to interact with others without any issues. The founders of the network believe that individual users can have full control of their data and identity. They aim to make Polkadot a decentralized system in cryptocurrency.
DOT token powers the Polkadot network, and it was initially placed on Ethereum. It was an ERC- 20 token but transformed to the native token on the Polkadot network. DOT gives users so many benefits, such as the opportunity to vote on changes to the network. DOT owners can choose to lock their tokens for some time, depending on how long the user sets. After the lock-period has elapsed, the coin will be released. This is more like the P2P trading platforms for cryptocurrency networks.
Now that we have a fair understanding of what Polkadot is all about, we can look at the possibilities the network offers people.
The same way your phone apps need upgrades to stay relevant is how blockchains need to stay up-to-date as well. The blockchain upgrade process can be grueling as hard forks that create transaction histories can take months before the upgrade is complete. However, Polkadot ensures that hard forks are not needed as the Blockchain adapts to the technological advancements available in cryptocurrency. This seamless process that is adopted in the Polkadot network has made a few industries take note. Hence, there are claims that finance, gaming, Supply chain management are all looking to integrate the Polkadot network into their operations.
The forkless upgrade puts the power back in people’s hands as we are no longer under the mercy of blockchain upgrades that take months before they are finalized. Plus, you can return to your activities on the network without wasting too much time.
The founders of Polkadots original plan were to create an ecosystem where the individuals using the framework can fully control and run the system as they see fit. This feature is allowing people to customize, innovate and improve the modules in the blockchain development scheme. People can experiment with new ways of doing things without tampering with the network’s general structure.
If there is anything Polkadot is renowned for, the ability to connect to multiplatform without any hassles will be right up that list. It does not need to rely on a centralized system that may have some fraudulent activities. Therefore, you can enjoy the cross-chain connection with other networks and transfer data with ease. There is ample opportunity for people in this aspect as you can share information at your convenience without running the risk of exposing your data to an untrusted source.
There have been concerns over the Polkadot networks’ security; it allows for a lot of flexibility among users. However, the network’s flexibility and control do not interfere with the information sharing on the network. The identity and data are secured in the Blockchain without any risk of being tampered with by unreliable sources.
The elements that were discussed earlier make this feature possible for the people using the Polkadot network. Polkadot can process vast amounts of information in parallel, which means it does not need to take each data one-by-one like other networks. The Para chains help connect the transactions of several chains into one integrated system and analyze the information to ensure speed and growth.
Polkadot is built on a Substrate framework that allows people to develop new ideas and implement them on their Blockchain. Now, the information is processed a lot faster and efficiently than before. This system has improved the way people see cryptocurrency, with investments continually being made. It has become more adaptable as other sectors in the world have begun incorporating the Polkadot system’s operations into the framework. Imagine the way finance would be if the right application of Polkadot is made; there will be a cleaner and more effective way of transacting financial services worldwide.